1 14 - 268 ( Debtor Creditor Entries for Modification of Troubled Debt ) Vista Corp . owes $600 090 to First National . The debt is a 10 - year 109 6 note due December 31 2010 . Because Vista Corp is in financial trouble . First National agrees to extend the maturity date to December 31 , 2013 , reduce the principal to $500 090 , and reduce the interes Irate to Go , payable annually on December 31 . Instructions ( 2 ) Prepare the journal entries on Vista's books on December 31 2010 , 2011 , 2012 , 2013 ( 6 ) Prepare the journal entries on First National's books on December 31 2010 , 2011 , 2012 2013 071 . 201